The great credit crunch

It seems like an almost inevitable part of modern day living is using your credit card. It is sometimes almost impossible to shop without it, especially if you like internet shopping. But unfortunately there is always a day of reckoning and that day is usually when the credit card statement arrives in the mailbox.

If you feel burdened by credit card debt, you are not alone and there are some really positive steps you can take to get on top of it. Here are some of our tips to managing your credit card debt:

1.      If you have a mortgage and equity in your home consider consolidating your debt into your home loan. Remember if you do this make sure you continue to make the monthly payments but put these in to your home loan.

2.      Shop around for a better deal – there are always offers of low or no interest on balance transfers if you switch your credit card debt to a competitor card. Whilst this doesn’t solve the problem, it gives you some breathing space to make some inroads on paying off the balance whilst minimising the interest.

3.      Speak to credit card provider and see if they will offer you a reduced interest rate if you go on a payment plan.

4.      Consider taking out a personal loan which will allow you to pay off all your credit cards and give you one monthly payment.

5.      If you have multiple credit cards, work out which one has the highest interest and work on paying this off first. Then move on to the next highest and so on.

6.      Always try and pay more than the minimum monthly payment. Quite often the minimum payment does little more than pay the interest meaning you are not making any headway on paying off the balance.

7.      Avoid using your credit cards! This is really important as it will undermine your good work if you continue spending.

8.      Once you have paid out or paid off your credit cards, cut them up or reduce their balance. This will stop the debt creeping up again.

9.      If you are really struggling there are not-for-profit organisations such as The Smith Family that offer free financial counselling.